Higher energy costs and a slower pace of decline in food prices likely put upward pressure on headline CPI inflation.The expected marginal increase in CPI inflation is unlikely to prompt inflation concerns, however. Benign inflation is keeping alive expectations of further rate cuts. Standard Chartered Bank notes in a report on Friday:
- We forecast February CPI inflation under the new series (base year: 2012) at 5.25% y/y, marginally higher than 5.1% in January.
- We expect core inflation to increase marginally to 4% y/y (3.9% in January), as transport costs likely moved higher on recent petrol and diesel price hikes.
- However, after the Reserve Bank of India’s decision to cut the repo rate by 25bps to 7.50% on 4 March, expectations of another rate cut at the 7 April policy meeting are subdued.
The material has been provided by InstaForex Company – www.instaforex.com